Last Thursday, Jouk and I hosted our closing webinar of 2014, where we talked about Disruption in Digital Banking. Here a short summary. (You can watch the recording on our YouTube Channel, and the slide deck is available on Slideshare).

We all agree: customer behavior is changing. Customers are more and more looking for convenience. The convenience and simplicity the get online and on mobile, when watching their favorite show on Netflix, or when taking that cab with Uber. But where is convenience and simplicity in financial services?

Was the taxi-market ready for disruption? Maybe, but nobody was arguing as strong for disrupting the taxi-market as they are now chanting to disrupt financial services. And it is starting. Uber is booming, but the Uber in banking, LendingClub, is going even stronger. LendingClub went IPO last week, opened with an 56% increase in share price, giving it a whopping 9 billion dollar valuation, “lifting the company’s market value higher than all but 13 U.S. banks.

And it is not just LendingClub that is starting to target the traditional banks. Tom Loverro of RRE Ventures recently created this image:

Fintech companies attacking Wells Fargo.

Here you see the homepage of Wells Fargo — but know, this is true for every traditional  bank — and some of the larger fintech companies going after pieces of the banks market. And this is not just a few logos. Fintech companies in 2014 raised nearly $3 billion — more than tripling the $930M invested globally in fintech in 2008. Yes, fintech is hot.

So what can banks and credit unions do to  fight back and step up their own game? It is time that banks challenge the challenger and become disruptors themselves. To do this, they have to start by accelerating their digital transformation.

In our webinar, we defined 4 Key Focus Points for 2015 to help banks and credit unions change themselves:

1. Start with the Customer Experience

Of course, your customer comes first. But is this reflected in every department? For most banks ‘Customer First’ is the mantra in the customer contact centre, but a bit forgotten when it comes to the rest of the organization. To often I hear Heads of Customer Experience talk at conferences and discover that their main focus is the call center and the training of branch employees. Where is technolog in this picture?

We see the shift in customer behavior. It is about a personal and relevant, ‘anytime’ customer journey. A journey that starts more and more on a mobile device. But to deliver the best mobile experience, you need to do a lot of work on the back-end. You need to change the stack. From inside out with a main focus on network, hardware, and just a little bit data and UX, to full focus on UX, data (to deliver a personal experience) and where hardware and network are just an after thought. This is the only way to be able to truly start designing for moments of truth in a iterative approach. The approach that make the disrupters so successful, but is still almost impossible for most banks.

2. Pursue an Omni-Channel Delivery Model

Stop saying omni-channel is just a marketing buzzword. The fact is: customers are using multiple devices and multiple channels to accomplish a task overtime. And this is especially true when purchasing new products and services. As a customer I expect the same brand-experience on every device and in every channel, I really don’t care that your Mobile App lives in a different code base, controlled by yet another agency. I expect to be able to do a seamless handover between devices and channels. I can continu watching House of Cards in the train, on my tablet, why can’t I continue that long loan application form on my regular computer after I decided to stop on my smartphone?

To make this possible, banks have to move the a flexible customer experience layer that runs independently from the main stack. Banks should have flexible API’s for their main processes and core systems, and a orchestration layer in between to ensure hand-over and session persistency. Start working on this.

3. Regain Control of your Digital Strategy

To deliver on point 2 and 3: you have to be in control again. To many banks lost control over their digital strategy to an outside software vendor, or to a big and bloated internal IT team. Especially the Tier 3 and 4 banks and credit unions, they all look the same. Why? Three banking vendors dominate the market, they are in control. As a small bank or credit union the only thing that you can change in your digital channel is the logo, and if you are lucky, the color of the text. For the rest you look exactly the same as all your competitors. This cannot be the way forward in the age of digital disruption.

Banks have to regain control. Core banking should be core banking. And on the front-end you need a digital banking platform where you are in control. A digital banking platform that is unique, personal and relevant. A digital banking platform where business and IT teams can work together on innovation. A digital banking platform that is flexible enough to mix and match best of breed 3rd party systems for PFM, Bill Pay, Remote Check Deposit, etc. You like the innovation you see on the stage of Finovate? Make sure your digital banking platform can run widgets that actually can let you experiment with those vendors. (Yes, a shameless plug for Backbase Engage and our Open Banking Marketplace).

4. Define your Inspiring Purpose

But it is not all about technology and new platforms. Most neo-banks, such as Simple and Moven attract a following of people that want to change the world. People want to engage with brands they feel like they ‘understand them’. They want to be seen with their new Nike’s, they drink Coca Cola instead of Pepsi. They have an Android phone because they don’t want to be a Apple sheep (or visa-versa). But how often are you proud of your bank? Banks need to find their voice, their brand feel, and need to start building that personal community of followers. People should be making a decision for a FI because they believe in that company. Banks need to re-define their inspiring purpose.

Watch the full recording of this webinar here:

It’s easier than ever to create your own web- or mobile-app. Following updates on websites like Betalist and Product Hunt you see new apps literally popping up every hour. At the same time there is a tremendous wealth of resources available on making your startup or side-project a success. From lively discussions on Y-Combinator’s Hacker News, to blogs by successful SaaS founders and VC’s, to whole communities and Wiki’s on “growth hacking” best practices.

I really like this movement and the openness in sharing things that work. However this also causes the ‘Twitter Bootstrap Effect’¹ in startup marketing. After a while, everything starts to look the same, because people are doing the same. Best practices become common practices. And people lose the reason why they are doing something and just do it because it is on a check-list, and they see other apps doing it.

One of these nowadays common practices is sending emails from the ‘founder’ with a request for feedback. A great tool to get feedback and improve if this would genuine and personal. But in the last months this have become ‘yet another activation email’ that is fully automated. It gives me the feeling you are doing it because others are doing it and you feel you have to do it as well. Especially if I respond with feedback and instead of getting into a personal conversation (something you want, right?) I don’t receive a response at all, but another automated email from the ‘founder’ 3 days later. Please note: this is not one case, this happened five times in the last two weeks.

With the wealth of best practices and tips in making your app a success; don’t loose focus. Don’t just do what the “25 ways to make your app a success” article tells you to, or copy your competitors. Go back to the core: why are you doing it? Ask why 5 times (yes, another best practice, sorry :)). Be unique, be genuine.

¹ = the trend that every web-app started to look the same, because they used the same framework.

Last month Eric Schmidt, who joined Google back in 2001, published the book ‘How Google Works‘, sharing what he learned after 13 years of explosive growth.

The book gives a great insight in the thinking of Google and its leaders. And covers how the internet, mobile, and cloud computing has shifted the balance of power from companies to consumers.

Recommended reading!

I really like how interwoven technology has become in our daily life. From computers you booted up once a day, to smartphones you use over 50 times a day, to wearable technology that is there always. Even when you sleep.

One of the front-runners in this space is Jawbone. And they are publishing some interesting data about their user base. I started following them after they showed how a recent earthquake impacted sleep for some of their users, and now they published some nice stats about average bed times across regions in the United States.

Clear that New York and Las Vegas stand out in this regards. Find the full article on the Jawbone blog: Which Cities Get the Most Sleep? And you can see the moving gif I created here.

Yesterday was the first day of Sibos, one of the largest financial conferences in the world, this year taking place in Boston, US. The most interesting sessions are taking place in the Innotribe section, where day one was all about cryptocurrencies, Bitcoin and the like. The live stream is up and the videos are available on their YouTube Channel.

I’m going on tour! In the next few months I will be presenting our new digital banking solution, Backbase Engage, as six events across the United States: starting with Finovate in New York and finishing at Netfinance Interactive in San Diego.

If you’re attending any of the events listed below, please let me know and come and say hello!

WhatsApp Turn on Notifications ScreenWhen I got my first phone the only two things that needed my attention where actual calls and text-messages. Quickly after that a calendar app followed and email was added. Now, on my iPhone I receive messages through over ten different apps. Ten different apps competing for attention and being used by different groups of people to send messages. No wonder people are changing their phones to become distraction-free.

I keep trimming it down. Not accepting new social networks, not jumping on the new messaging platforms when they pop-up. Moving most apps from my home screen to the second or third screen and disabling most notifications. Especially this last option brings a lot of freedom. No notifications, no alerts. Only see the messages when I open the app. And I really like how Apple gives me complete control over notifications and the notification center. Making my phone, my phone.

However, there is a new trend amongst social and messaging apps. I noticed it the first a few weeks back when Facebook Messenger showed me this message, And now every time I open WhatsApp: a splash screen that pushes me turn on notifications again. The notifications I purposely disabled. And they don’t ask me once or twice, no: EVERY TIME I OPEN THE APP.

I changed the default for a reason. Stop making me fit your ideal scenario and use case.

Using a rap video to bring people to a fintech conference? Yes, Money20/20 is doing it. A move that shows Money20/20 is not your regular banking conference. They are different, banking and payments is not longer boring, and suits not necessary. And I definitely like the poke they make on new ways of paying and the many new concepts out there, by introducing: pay by ass.

p.s. attending Money20/20 in Las Vegas? Reach out, would be great to meet up. Still need to register? Use the promocode ‘BACBAS20′ to get 20% off.

You can find numerous articles describing how to attract more visitors, convert them into customers, and then cross- and up-sell them to different membership tiers or add-ons. However, one item that is not described often on popular SaaS strategy blogs is another aspect of revenue generation: how to make money with success penalties and user lock-in—perhaps because it is not very customer friendly. It is a strategy worth exploring since the biggest SaaS vendor,, seems to be successful with their success penalty strategy. There are five simple steps for success with success penalties:

Step 1: Pick something that hits a limit only when the customer is hooked.
When implementing a success penalty strategy, picking the limit over which you will charge the extra fee is the most important step. Make sure it is something prospects don’t consider and don’t compare to vendors. For example, if your normal pricing is per seat and membership tiers differentiate in seat pricing and functionality, apply the success penalty to the amount of data storage and charge per GB.

Now that you’ve chosen your limit to charge the success penalty on, make sure that limit is not discovered too quickly. You want your customers to make a complete switch to your app. You want them to have people trained, use it in their daily work, and have their organisation running it for at least a year before they hit this limit. If your customers discover the limit early, they will switch to a competitor. The longer they run your app, the more they do with it, and the more you have them locked in. No IT manager wants to retrain 30 employees to use a different app or procedure—they would rather pay your penalty fee.

One way to accelerate this and make it a success penalty rather than a regular fee that customers discover is to promote behaviour that makes customers hit the success penalty limit earlier. At Salesforce for example, training, how-to, and best practice, promote that every email, call, activity, and marketing campaign is logged in the system. They are right: a CRM should have all the information in one place, the central marketing and sales hub. Nobody is going to doubt that; however, never explain that every email, every call, and every other record is slowly approaching the limit you have chosen.

BONUS: Don’t scale the limit with tiers or extra seats!
You can make it even better: don’t scale the limit. Keep the same limit if the organisation is using 5 seats or 25 seats. This fits perfectly in our strategy: the more seats, the more the organisation is locked in your app and the quicker they will hit the limit. Is it logical to charge per seat but keep the limit organisation wide? No. That is the beauty of the success penalty.

Step 2: Don’t communicate the limit on your website.
Never put the limit explicitly on your website or in the membership tier comparison tables. That only makes prospects think about the limit during vendor comparison. Keep your tiers crisp and clear. Act like there is no limit at all, just extra functionality.


BONUS: Hide the limit in a PDF document!
If you never mention a limit, how can you use it later to justify the success penalty? You have to mention the limit somewhere, but don’t do it where people will see it easily. Put the limit in a PDF document where few people will read it.


For those few that download the PDF and actually read it, make sure the limit is written in small font and mentioned only at the bottom of the last page.


Step 3: Let customers overrun the limit more then 400% before starting the sell.
It is important to have a customer locked-in before notifying them of the limit and charging the success penalty. Why do it immediately after they hit their limit? That would give the opportunity to scale back, remove items, and move on—way too risky. Make sure they overrun their limit by at least 400% before notifying the customer. They are really locked in at this point and you can charge 400% more than you would when notifying them directly.

Step 4: Charge absurd amounts for something that is normally cheap.
We call this a success penalty because customers are successfully using your app and hitting a limit caused by their success (tracking more in a CRM is a success: the more you track, the more you have to pay next to the regular seat pricing). To make it a double penalty, charge absurd amounts for something that is normally cheap.

Everyone knows that the price of a gigabyte of data storage is nearly nothing in 2014. But when implementing a success penalty strategy, charge like it is 1989! Why go through all this effort when you are only asking for cents? You can charge thousands!


Step 5: Don’t offer the customers tools to fix the overrun limit.
The final step, but the most important: don’t offer tools to fix the overrun limit. If the customer can delete a few records to be below the limit, everything is lost. Refer to step 3: only notify the customer when 400% over the limit and make it almost impossible to get below that limit with the tools in your app.

Organisations will hit the data storage limit around 1,000,000 records in the system (roughly 16 months of email and calls at an organisation that purchased 25 seats. Remember, the limit does not scale with the seats!). Cleaning up a million records, when the tools provided only work in batches of 250, is going to be a rough job.

Of course, nice guys will develop a tool to let customers do this easier and quicker. However, make sure API access is only available in the upper tiers of your pricing plan so if you lose the success penalty revenue, you still win since the customer had to upgrade for access to the API tool to be below the limit.

BONUS: Offer a paid service to fix the penalty limit!
There will always be non-tech savvy users that upgrade to a higher plan and think they are safe. But they still need a tech-focused tool with API access to avoid the success penalty. If they can’t figure out how to do that, offer premium support, charged per seat per year (recurring revenue!) to do it for them—you are the good guy.

That’s it: a five-step revenue booster straight out of the playbook from a successful and innovative SaaS company. is a great tool. This blog post is not meant as a negative commentary on Salesforce, only as a post to highlight a success penalty best practice.